Welcome back to the weekly Dividend Dollars portfolio review! I apologize for missing an article last weekend! I was traveling for a wedding and did not have time to write. This article will catch us up and detail all the moves I’ve made in the past two weeks.
This portfolio update is brought to you by Sharesight, a portfolio tracking tool that I am happy to partner with. Their platform makes tracking trading and dividend history, understanding your performance, and saving time a breeze. I wrote a review of the product that you can read here if you’re interested in learning more! Click the link above or the picture below to get a special offer only for Dividend Dollar readers!
Here at Dividend Dollars, our investing approach is a dividend growth strategy with aspects of value investing and fundamental analysis. I am a young investor in my 20’s and by sticking to this strategy over the long term, the magical powers of compounding are on my side. This allows me to more easily build substantial positions in dividend paying stocks over time, which will one day help me reach the ultimate goal of being financially free through the sources of passive income they provide. You can read more about the strategy here. Let’s dive into the portfolio review!
Portfolio Value
To date, I have invested $14,170 into the account the total value of all positions plus any cash on hand is $13,752.36. That’s a total loss of 2.95%. The account is down $641.82 for the week which is a 4.46% loss.
We started building this portfolio on 9/24/2021 and when compared to the S&P 500 we are outperforming the market so far! Within that same timeframe, the S&P 500 is down -13.3% which puts us 10.38% higher than the market! I love tracking my portfolio against a benchmark like the S&P. The above chart comes from Sharesight which makes portfolio and dividend management a breeze!
We added $440 in cash to the account in the last two weeks, trades made will be broken out below.
Portfolio
Above is a dashboard of the portfolio that tracks annual dividend income, yield, beta, dividend growth, and more.
Below is a table of everything we are invested in so far. There you can see my number of shares, shares bought through dividend reinvestments, average cost, gains, and more. The tickers in green are positions that I bought shares in this week, the blue ones are positions that I reinvested dividends into, the yellow ones are positions that announced a dividend increase this week, and the red are positions that I trimmed. Our PADI increased from $507 to $583.
Dividends
These two weeks I received $22.50 from four dividends ($XYLG, $INTC, $CMI, and $MSFT).
In my portfolio, all positions have dividend reinvestment enabled. I don’t hold onto the dividend, I don’t try to time the reinvestment, I just let my broker do it automatically.
Dividends received for 2023: $91.17
Portfolio’s Lifetime Dividends: $501.58 – WOOT WOOT $500 mark hit!
Trades
These two weeks weren’t too busy for me an account of my travels and then coming back home in midst of a major bank collapse! I deployed all of my stored cash and added even more for buys late this week in NYCB. The buy zone and the channel in the chart from two weeks ago was totally blown apart by the news in the banking sector. NYCB, BAC, and ALLY are my main bank holdings and are still safe investments in my opinion, I will be adding to them more in the coming weeks as the Silicon Valley Bank situation plays out.
New York Community Bank ($NYCB) – added 50 shares at $7.52
Next week I will look to continue my weekly buys into $SPY, $SCHD, and $XYLG as I did not do those for the last two weeks. I will also look at adding to beaten down bank stocks even more, plus some other adds to my redder positions in $INTC and $MMM.
Summary
That is it for the update this week. The market recap and outlook is also posted and provides tons of information on what macro statistics I look to at to keep a temperature gauge on the market and inform my portfolio movements. Read that here!
Let me know what you think of the progress so far, share with me your progress and questions, interact with me on Twitter and CommonStock and other socials using the links below!
Thank you for reading! See you next week and stay safe!
FILE PHOTO: SVB (Silicon Valley Bank) logo is seen through broken glass in this illustration taken March 10, 2023. REUTERS/Dado Ruvic/Illustration
I apologize for missing the report last week, was out on vacation but we are back now and have TONS to cover!
This weekly market recap is brought to you by Koyfin, a powerful analytical tool that I am proud to partner with. Their platform is entirely customizable for whatever data you want to look at including stocks, ETFs, mutual funds, currencies, economic data releases (one of my personal favorites used often for these posts), crypto, and even transcripts of company events! Click the link above to get a special offer only for Dividend Dollar readers or go give my product review a read if you’re interested!
Weekly Market Review
It was a big losing week for the market as investors analyzed Fed Chair Powell’s testimony before Congress, the February employment report, and news of SVB Financial’s Silicon Valley Bank being shut down. All major indices ended the week down over 3.5%.
Monday started on an upbeat note with early gains being supported by positive moves in some mega cap stocks. Apple ($AAPL) was a leader in that respect after Goldman Sachs initiated coverage with buy rating with a $199 price target.
Under the surface though, there was some anxiousness felt as the market waited for key events in the week ahead. Even at midday, as the indices were trading near their highs for the day, the number of stocks declining was greater than the number of stocks increasing.
Mega cap strength started to face and selling ramped up in the Treasury market. The main indices were in a slow grind lower for the rest of the day.
Economic data for the day was only the January Factory Orders. This fell 1.6% month-over-month (consensus -1.8%). Shipments of manufactured goods increased 0.7% MoM after falling 0.6% in December. The key item in the report was the strength seen in nondefense capital goods orders, excluding aircraft. This criteria, which factors into GDP forecasts, were up 1.1% after a 0.6% decline in the last reading.
Powell stated, “Although inflation has been moderating in recent months, the process of getting inflation back down to 2% has a long wat to go and is likely to be bumpy… the latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated. If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes. Restoring price stability will likely require that we maintain a restrictive stance of monetary policy for some time.”
Powell’s Q&A portion afterwards added that data doesn’t suggest that the Fed has overtightened yet. Data suggests they have more work to do, increasing the likelihood that peek rates are higher than the Fed’s projections from the December meeting may be increased. The hearing and Q&A session ultimately suggested that a 50 point hike is back on the table. Markets moved lower throughout the day upon this news.
Consumer Credit increased by $14.8B in January compared to the expected $22.9B. The takeaway is that consumer credit expansion is slowing, likely a result of rising interest rates. The decrease was driven predominantly by revolving credit and was the 2nd lowest increase in the last 12 months.
With that move, stock prices deteriorated and the major indices slipped closer to their lows of the day. They did close above the lows, though, thanks to mega-caps running in the last hour of the day. That momentum slowed with the S&P 500 neared its 50 day moving average ($3,997) which turned from support to resistance on Tuesday.
The weekly MBA mortgage application index rose 7.4% with refinancing applications increasing 9.0% and purchase applications 7.0%.
The ADP Employment Change showed private payrolls rose by 242,000 in February against a 195,000 consensus. The January reading was revised upwards by 13,000.
The JOLTS Job Openings reading total 10.8M in January after a 0.2M upward revision for December.
The trade deficit for January grew to $68.3B compared a consensus of -$69B. December numbers were revised upwards by $0.2B. Imports for January were $9.6B more than December imports. Exports were $8.5B more than December exports. The takeaway here is that both imports and exports increased compared to December, reflecting a pickup in global activity and demand.
Then Thursday came around, and the situation that we’ve all been watching unfold for days now had kicked off.
The day started green, lead again by mega-caps and hope that higher-than-expect jobless claims could be followed by a weaker-than-expected nonfarm payrolls reading on Friday.
Initial jobless claims for first week of March increased by 21,000 to 211,000 compared to a consensus of 198,000. Continuing claims increased by 69,000. This was the highest claims level since December and teased the idea of some labor softening. However, current claims levels still are at levels that are indicative of a tight labor market overall.
The opening was short lived as bad news and price action in the banking space weighed down the market.
The S&P 500 cut under its 200 day moving average and closed near lows for the session in a steady and broad based sell off.
Bank stocks took the bulk of the losses as concerns about rising rates, higher deposit costs, and weaker loan demand collided with the news that Silvergate Capital ($SI) is voluntarily liquidating and that SVB Financial Group ($SIVB) sought to raise capital through the sale of marketable assets at a loss and a potential stock offering to combat their increased cash burn.
The second part of that last paragraph was the main trigger of worries about the state of deposits and capital positions for smaller banks that drove major selling interest.
Ultimately, things break when the Fed is in an aggressive tightening cycle, and banks, whether or not they are involved in a specific problem, will get pulled into the downfall regardless of their roll.
Treasury yields also fell lower that day, yet stocks did not respond in the opposite way. This leads us to believe that the flight to treasuries was more of a flight-to-safety than anything else.
Friday opened considerably lower and kept that theme up for most of the day. The employment report brought some good news with nonfarm payrolls being strong and average earnings growth being weaker, but the SVB Financial situation was by far the largest driver of price action. A broad sell off brought the S&P 500 under 3,900 on big volume.
Silicon Valley Bank was shut down by the FDIC in the late morning. This is the second largest bank to get shut down by the FDIC since Washington Mutual in 2008.
The FDIC also created the Deposit Insurance National Bank of Santa Clara to protect insured depositors of $SIVB. This news followed earlier reports that the Founders Fund (Peter Theil’s VC fund) had advised companies to pull their money out of the bank and that deposit outflows were outpacing the process of selling SVB to a prospective buying banks.
Wide concerns about SVB’s troubles and their potential contagion effects continued the flight-to-safety in the Treasury markets on Friday.
Most views from analysts so far are that SVB’s situation won’t be a systematic banking problem given how well capitalized the system is. That said, the market saw a rebound effort squised after it was reported the SVB was being shut down. The market lost their hold and broad based selling picked up putting the S&P 500 to a low of $3,846.
The sudden collapse of SVB could leave billions of dollars belonging to companies and investors stranded. As of the end of 2022, SVB was the 16th largest bank in the US with just over $200B in assets. Their tech and start up focus has felt the brunt of the aggressive interest rate hikes by Fed.
The Treasury bond assets they sold on Thursday incurred a $1.8B loss as the value of those bonds fell with the rising rates, the value of their hold to maturity assets have incurred an even larger, though unrealized, loss.
The main office and all branches will reopen on Monday and all insured depositors will have full access to their insured funds. That is good news, however, roughly 89% of the banks $175B in deposits were uninsured as of the end of 2022. What happens to these funds is anyone’s guess.
We can assume that the FDIC is working this weekend to find a bank that is willing to acquire SVB. A merger by Monday could secure the safety of those uninsured deposits, but no deal is certain.
I have seen headlines that Roblox Corp ($RBLX) and Roku Inc ($ROKU) have hundreds of millions deposited with the bank. With most of these funds uninsured, share prices have dropped by a considerable amount.
Collectively, the banking sector has lost over $100B in stock market value from Thursday and Friday, with European banks also feeling some pain. Some analysts are forecasting more pain for the sector as hidden risks become more clear.
All eyes will be on the FDIC and if they are able to secure an acquirer for SVB or if they will be force to liquidate the bank.
Dividend Dollars’ Outlook & Opinion
That’s it for the recap. Now for my opinion!
To be blunt, this week was insane. The market made big moves down on the SVB news. Economic readings and Fed speak were worth paying attention, but when it really came down to it SVB and the concern it has caused for the banking sector has defined this week. It may even be the definitive moment for the year.
This week was so red that $SPX broke down through numerous key points. The week started above every key point of support, but quickly took them all out as the week came to an end. The market broke through the 50 day moving average first on Tuesday, then the 100 and 200 day moving average on Thursday, and broke down below the long term downtrend established at all time highs in the beginning of 2022 before testing the bear market level at $3,855.
Price action broke down below that level briefly before ending the week just above it at $3,861.86.
As you can see by the three circles I have on the chart, following significant breakdowns underneath the bear market level, the following days are extremely volatile. I expect the next fews days to not be an exception, if anything they’ll turn up the volatility as the SVB situation unfolds.
Up until this week, the market in 2023 has been playing red-light green-light with inflation readings and Fed meetings. Markets have been quick to react to every little item that gives insight into what the Fed will do moving forward.
Now we had a giant wrench thrown into that theme this week. Fed Powell’s testimony affirmed the position that Fed is willing to pick up the pace on rate hikes if economic data shows it is needed. Add to that, SVB has collapsed due to the effects that these rate hikes have had on them as bank and their customers. Granted, there’s a lot to pick apart and criticize with that situation as safe and sound banking strategies are not wholly evident, however, it is yet to be seen if this situation will change the Fed’s approach at all.
Will they remain focused on inflation and protecting the value of the dollar despite the giant problem on the horizon that is the SVB collapse? We will have to wait and see till the next rate decision on 3/22/23.
Because of this, the CPI report on Tuesday and the employment reports that follow may be difficult for the market to wrap their heads around the meaning of those readings. Anticipate a lot of volatility as all eyes are on this situation and Fed.
I anticipate more red next week, mostly due to investors being jaded by SVB and the effects on the market, but also as a result of the CPI and PPI reports. Forecasts for both are expecting an improvement on the MoM and YoY readings. If these come in higher than expected, expect the negative reaction to be larger than normal.
That’s it for my recap! Go check out my portfolio update to see how I am navigating these markets while building dividend-based wealth.
And if you like updates like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week.
This weekly market recap is brought to you by Koyfin, a powerful analytical tool that I am proud to partner with. Their platform is entirely customizable for whatever data you want to look at including stocks, ETFs, mutual funds, currencies, economic data releases (one of my personal favorites used often for these posts), crypto, and even transcripts of company events! Click the link above to get a special offer only for Dividend Dollar readers or go give my product review a read if you’re interested!
Weekly Market Review
This shortened holiday week ended up being another losing one, held down by the same issues that beat down price action last week. There’s a lingering sense that the market was due for consolidation and a growing idea that the Fed will keep rates higher for longer.
Fed concerns were the focus midweek when the FOMC minutes for the February 1st meeting were released. They weren’t aggressively hawkish or dovish, their default position continues to be a rate-hike position.
Markets are aware that many of the data releases since the last FOMC meeting are not likely to change the Fed’s mindset. A stronger than expected January employment report, the stronger than expected ISM Services PMI, the January CPI and PPI reports, all capped off by this week’s stronger than expected core PCE, which is the Fed’s preferred inflation measurement.
After the hot PCE reading on Friday, St. Louis Fed President Bullard said that “it appears that the Fed may be able to disinflate in an orderly manner and achieve a soft landing”.
Prior to that, there was some movement higher on Thursday, following NVIDIA’s ($NVDA) earnings and positive guidance. However, the market primarily had downside bias this week and took out its 50-day moving average before testing the 200-day average.
The Treasury market was boosted off of the price action in equities this week, creating tough competition for returns from stocks. The 2-year note rose to 4.78% and the 10 year note rose to 3.95%. The dollar index also rose this week by 1.4%.
None of the 11 S&P sectors made gains this week. Energy was close at -0.04% while consumer discretionary and real estate were hit the hardest will losses over -4%.
Below are summaries of daily price action throughout the week:
Tuesday
The week started lower on increasing geopolitical tensions and continued money being taken off of the table following last month’s rally for a close under 4,000.
News reports state that China’s President Xi Jinping may go to Moscow in April or May to meet with Putin and encourage peace talks, a view that seems to run counter to the assumed supportive relationship between Xi and Putin
Disappointing guidance came from Home Depot ($HD) and Walmart ($WMT) and helped push consumer discretionaries down to last place.
The January Existing Home Sales fell -0.7% to 4 million (consensus 4.12). Key takeaway is that sales are still under pressure of high mortgage rates and economic uncertainty. This keeps homes on the market for longer and may cause a moderation in median prices over time.
Wednesday
The day started on a positive note, but moves were modest as the market waited for the release of FOMC minutes.
The FOMC minutes indicated that “more evidence of progress across a broader range of prices would be required to be confident that inflation was on a sustained downward path.” A number of members also wanted raise rate by 50 points at the meeting
.Immediately when the minutes were released, price action in the market whipsawed before settling into a slow decline
Prices got pushed down as other disappointing earnings came out ($EBAY, $DG, and $DPZ are some names that come to mind in that regard). The key takeaway was that consumers are slowing their discretionary spending causing slower growth and further cuts to earnings estimates in the sector, all while the Fed looks intent to raise rates higher.
Downside pushed the S&P below the 4,000 level and its 50 day SMA. Buyers stepped in and finished the session with decent gains.
Initial Jobless Claims declined to 192k (consensus 200k) and continuing claims decreased to 1.654M. The low levels of initial claims contribute to expectations for the Fed keeping rates higher longer.
The second Q4 2022 GDP estimate showed a downward revision to 2.7% (consensus 2.9%). The drive down was moved by less personal spending which was partially offset by an increase in non-residential investment. This could be an off-putting mix for the Fed. Growth and inflation is still running hot, one of them must give.
Friday
The week ended with board-based selling following the hotter than expected PCE reading.
The Core-PCE price index rose 4.7% year-over-year versus 4.6% in December. Real disposable income was up 1.4% month-over-month and personal savings rate increased to 4.7%, indicating that consumers can keep spending.
The key was that the report showed inflation, not disinflation, and good spending potential which can keep the economy running above potential. That combo causes concerns about inflation being sticky and prompting the Fed to stick to tightening for harder and longer than expected.
The S&P closed below its 50 day SMA and tested its 200 day SMA, recovering a bit from the lows of the day before close.
Dividend Dollars’ Outlook & Opinion
That’s it for the recap. Now for my opinion!
This week was another week of consolidation and modest losses that we have been discussing in this outlook section for 3 editions now.
This was a light week in terms of quantity of economic data, however, the few releases we did have were heavy hitters. The Core PCE reading confirmed that the inflation moderation which began in June of last year has mostly leveled off, and at a level that is much higher than the Fed would like. Pair that with the fifth straight week of initial jobless claims under 200k, and you can see that the labor market is strong and able to withstand further tightening.
Earnings continued this week with 55 S&P 500 participants reporting. 44 of them beat EPS expectations. Overall, 98% of the S&P stocks have reported. Below so far are the aggregate beat rates this quarter compared to prior quarters. These figures are tracked using MarketBeat.
Now moving on to technicals. Last week pointed to slightly bearish with high volatility, and that was what we got! Within a month after the SPX broke through the long-term downtrend (red channel), 4,100 level (top green line), and hit a technical golden cross, did it struggle to keep strength. SPX broke through support at the 50 day SMA on Friday, and has the 200 and 100 day SMA not far under it for support and are converging with the downtrend. Who knows if these will hold, but they should at least slow the downtrend.
Other metrics have shifted moderately bullish. VIX put OI grew more than call OI, SPX call OI grew more than puts, and call OI for major ETFS also grew more than puts for the week, a moderately bullish change. However, the Vix volume put to call ratio moved from neutral to moderately bearish this week at 0.34. SPX volume put to call ratio looks neutral.
Overall, technical have deteriorated and inflation is not moderating. With earnings season basically over, three weeks till the next inflation report, four weeks till the next rate hike, the market may move on news headlines and Fed speak more than usual in the near term.
Technicals and inflation look we move down, a number of metrics have improved and look like we move up, and major economic releases are a few weeks out. Short term time frame looks to be volatile and set up for an oversold bounce before chop and downtrend continues. With that said, I’m neutral for next week and could see the market being moderately down or up. This is one of those weird weeks looking forward where all this analysis may not really help!
That’s it for my recap! If you would like to see how I am building my dividend portfolio using my predictions/strategy written here, you can read about my buys in my weekly portfolio update on this link.
And if you like updates like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week.
This weekly market recap is brought to you by Koyfin, a powerful analytical tool that I am proud to partner with. Their platform is entirely customizable for whatever data you want to look at including stocks, ETFs, mutual funds, currencies, economic data releases (one of my personal favorites used often for these posts), crypto, and even transcripts of company events! Click the link above to get a special offer only for Dividend Dollar readers or go give my product review a read if you’re interested!
Weekly Market Review
The major indices ended down this week for the second week in a row, first time in 2023. Instability in the market was driven by reactions to economic releases and Fed comments throughout the week.
MoM inflation data in the January Consumer Price Index (CPI) was not pleasing, but the report showed continued deceleration on a YoY basis. Services inflation, the section that the Fed seems to care about the most, was the exception with a jump to 7.2% YoY from 7.0% in December.
The positive economic news paired with accelerating services inflation, fueled concerns about the possibility of the Fed raising rates more and keeping them higher for longer than previously expected.
5 of the 11 S&P 500 sectors made gains week led by consumer discretionary (+1.6%) and utilities (+1.1%). The energy sector (-6.3%) was the worst performer by a long shot with falling oil prices.
Below are breakdowns of daily action for the week.
Monday:
A quick dip right out of the gate had the S&P 500 slip below the 4,100 level before buyers stepped in and a rally effort took root.
Mega caps were driver of index gains. Meta Platforms ($META) and Microsoft ($MSFT) each rose more than 3.0% on Monday with no specific catalysts.
“Median inflation expectations remained unchanged at the one-year-ahead horizon, decreased by 0.2 percentage point at the three-year-ahead horizon, and increased by 0.1 percentage point at the five-year-ahead horizon, to 5.0%, 2.7% and 2.5%, respectively.”Disagreement on these figures decreased slightly YoY
The median expected growth in household income dropped to 3.3%. This is the largest one-month drop in the 10-year history of the series and is the first drop since last September.
Tuesday:
Tuesday’s trade was mixed as investors digested the January Consumer Price Index (CPI) released in early hours.
Total CPI increased 0.5% MoM (in line with consensus) and is shown in the graph below. Core-CPI increased 0.4% MoM (in line with consensus).
On a YoY basis, total CPI was up 6.4% (the smallest 12-month increase since October 2021) and core-CPI was up 5.6% (the smallest 12-month increase since December 2021). The YoY levels were not as low as expected AND services inflation hit 7.2% YoY from 7.0% last month.
The key CPI takeaway is that there has been a clear deceleration from peak inflation; however, the inflation rates are nowhere near low enough for the Fed to even think about cutting rates this year.
The market moved higher shortly after the open. The early gains faded, and the S&P 500 briefly slipped below the 4,100 level. There was a bounce late day and closed the session above intraday lows.
Treasury yields seemed to have a more concrete reaction to the CPI data as yields jumped and closed higher.
Wednesday:
Ahead of Wednesday’s open was the retail report, which reflected continued strength in the economy, but left the market concerned that it boosts the likelihood of higher rates. Total sales in January were up 3.0% MoM (consensus 1.7%) and sales, excluding autos, up 2.3% ( consensus 0.8%).
The key takeaway from the report is that consumers were spending freely on goods in January despite inflation pressure; in fact, every single sales category showed a MoM increase, led by a 7.2% surge in sales at food services and drinking places.
The January Industrial Production came in flat (consensus 0.5%) and Capacity Utilization came in 78.3% (consensus 79.1%).
The soft reading for January can be attributed entirely to a drop in utility output. Otherwise, there was some strength in mining and manufacturing output, the latter of which saw advances in durable, nondurable, and other manufacturing activity.
Equities started down, but true to 2023 form, investors stepped in to buy the early weakness. The main indices all closed the session at or near their best levels of the day.
High-beta stocks, uplifted by the positive earnings news and guidance from the likes of Airbnb ($ABNB), Roblox ($RBLX), and Analog Devices ($ADI), helped Wednesday’s gains.
Thursday:
Thursday was down in the start and the finish. The negative bias was brought on by the higher-than-expected Producer Price Index (PPI) number for January and another low level of weekly initial jobless claims, which fueled concerns that the Fed will not pause its rate hikes in the near future.
January PPI came in at 0.7% shown below (consensus 0.4%) and Core PPI at 0.5% (consensus 0.3%).
The key takeaway from the report for the market is that headline inflation was hotter than expected on a monthly basis and causes concerns about inflation pressures persisting at higher levels for longer than expected.
Weekly Initial Claims shown below came in at 194K (consensus 203K) and Continuing Claims at 1.696 million
The persistence of initial claims below 200,000 reflects a very tight labor market, and a reluctance to cut workforces, which will continue to drive worries at the Fed about tight labor market conditions feeding into stickier wage-based inflation pressures as reflected in high service readings.
The market recovery mid-day coincided with buyers stepping in when the S&P 500 breached the 4,100 level, along with Treasury yields backing down from their post-data release highs.
There was a steep reversal in the last hour that had the major indices close the session near their worst levels of the day, which took the S&P 500 below 4,100 again.
The late afternoon plunge was precipitated by Fed speak we previously mentioned (except for Mester, who spoke prior to the plunge).
Friday:
The stock market opened weak continuing Thursday’s downside momentum.
Treasury yields began to settle and stock sentiment shifted slightly higher.
Ultimately, the indices closed the session near their best levels of the day even though some mega cap names were not following.
Dividend Dollars’ Outlook & Opinion
That’s it for the recap. Now for my opinion!
This week was another week of consolidation and modest losses and matched perfectly with the “technicals suggest a flat or slightly bearish week ahead” call from last week’s report. This is the second week in a row of this since I called for a slowdown in the market outlook from 2/3/23.
We had two key inflation reports with the CPI and PPI, both came in well above their estimates causing a fair amount of volatility. One flaw from this report last week was that I did not touch on the coming PPI report. Historically, the PPI tends to not move the market as much as the CPI, however the bigger miss on PPI proved otherwise this week.
As you can see in the chart below, while still quite historically high, the YoY PPI (white) and CPI (blue) peaked in June of last year. They continue to trend lower.
Earnings reports this week had 59 reports of the S&P 500 companies, putting us 81% of the way through earnings season. 41 of the 59 this week beat EPS expectations, below so far are the aggregate beat rates this quarter compared to prior quarters. These figures are tracked using MarketBeat.
Now moving on to technicals. Only three weeks after the SPX broke above the long-term downtrend (red channel), broke above resistance at 4,100 (top green line), and hit a golden cross (white arrow) and the SPX has struggled to hold the support line at 4,100. The first half of the week looked decent, but the last two days did not. Ending the week under that level and establishing a new low on 2/17 compared to the last low on 2/10 looks like a technical breakdown. SPX may be trending in the down direction in the near term.
Other metrics have shifted into bearish territory since last week. SPX OI changes grew more this last week on the put side which is moderately bearish. ETF OI changes were slightly more on the put side, but not enough to make it bearish, I consider this to be neutral. The VIX open interest put/call ratio is down almost 10% this week, this movement follows the VIX index and implies that VIX is likely to go higher moderately in the near term. This is slightly bearish. SPXOICPR saw a similar move.
Overall, metrics like the above, failure of near-term technical support, hawkish Fed comments, a concluding earnings season, a five week wait till the next FOMC meeting, and mixed economic data all make the market look fairly mixed or slightly bearish in the near-term. Next week is light on the economic data front except for Core PCE (the Fed’s preferred inflation gauge) out on Friday. With a holiday on Monday and an apparent waiting period till the big Core PCE report on Friday, I’m anticipating a choppy week till end of week with Core PCE determining the final move.
That’s it for my recap! If you would like to see how I am building my dividend portfolio using my predictions/strategy written here, you can read about my buys in my weekly portfolio update on this link.
And if you like updates like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week.
This weekly market recap is brought to you by Koyfin, a powerful analytical tool that I am proud to partner with. Their platform is entirely customizable for whatever data you want to look at including stocks, ETFs, mutual funds, currencies, economic data releases (one of my personal favorites used often for these posts), crypto, and even transcripts of company events! Click the link above to get a special offer only for Dividend Dollar readers or go give my product review a read if you’re interested!
Weekly Market Review
The rally lost some steam this week due a sense that we were due for a drawdown or some consolidation on the back of rate-hike and valuation concerns. After last Friday’s January employment report surprise, there wasn’t a great deal of conviction on the sell side or the buy side this week. Ultimately, the indices all registered losses, which had the S&P 500 settle Friday’s session below the 4,100 level.
Monday, the market was slow to open as we were hesitant of Fed Chair Powell’s “Conversation with David Rubenstein” at the Economic Club of Washington, D.C. on Tuesday. Heightened geopolitical tension after the U.S. shot down China’s suspected spy balloon off the South Carolina coast last Saturday may have also contributed to the slow start.
The indices rebounded from their opening lows but could never seem to hold onto any momentum. We spent much of Monday moving sideways in a tight trading range. The Dow Jones Industrial Average briefly scooted above its range in late afternoon before fading again into negative territory.
Tuesday, unsurprisingly started on a mixed note. The main indices oscillated around their flat lines in the first half of the day as investors awaited the aforementioned Powell talk.
Mr. Powell didn’t say anything too surprising, but the market responded with some volatile price action nonetheless. The main indices initially shot higher off of Powell’s calm response to the surprise employment report last friday.
That initial jump gave way to selling pressure after Mr. Powell said that the Fed will react to the incoming data and will do more rate hikes if the data suggest that is necessary. A response that we have been hearing for some time. He also said that the Fed has a significant road ahead to get inflation down to 2% and that he thinks it won’t be a quick move to that goal
The following reversal in the indices saw the S&P 500 breach support at the 4,100 level, where buyers stepped in for a technical rebound, supported by short-covering activity. The indices closed near their best levels on Tuesday.
On Tuesday, we also got the December Trade Balance report. It came in at -$67.4 bln compared to a consensus of -%68.5 bln. The prior reading was revised to -$61.0 bln from -$61.5 bln.
The key takeaway from the report is that it reflected a slowdown in global trade, evidenced by a $2.1 billion decline in the 3-month moving average for the goods and services deficit to $68.6 billion that resulted from a $2.6 billion decrease in average exports and a $4.7 billion decrease in average imports.
We also got the Fed’s Consumer Credit report which showed that total outstanding credit increased by $11.6 bln in November following an upwardly revised $33.1 bln in November.
The key takeaway from the report is that total consumer credit expansion slowed in December, with higher interest rates crimping loan demand. Nonrevolving credit saw its smallest expansion ($4.3 billion) since August 2020.
Then, stocks spent Wednesday drawing down largely due to concerns that the market got overextended and was due for some consolidation. Selling efforts were broad based but generally modest overall.
A notable exception was Alphabet ($GOOG), which tanked 7.4%. Shares were falling on concerns the company is behind in the AI space — a concern that was magnified by news that its Bard AI bot gave a wrong answer at the company’s launch event.
Weakness may have also been exacerbated by Biden’s State of the Union address where he called for a billionaire minimum tax, a quadrupling of the tax on corporate stock buybacks, and raising the debt limit without conditions. He also made a case for more antitrust regulation of technology companies.
With a divided Congress, the market wasn’t overly concerned about new tax policies being passed, but it was interested in what happens with the debt limit discussions and the possibility more regulations.
We also received data on the Weekly MBA Mortgage Applications Index (7.4%; Prior -9.0%) and the December Wholesale Inventories 0.1%. Prior was revised to 0.9% from 1.0%.
The stock market started Thursday higher, yet the bulls were soon corralled and the major indices spent most of the day retracing their opening steps in what became a trend-down day. The selling that took place was broad based and left the S&P 500 below 4,100 at the closing bell.
A favorable response to Walt Disney’s ($DIS) better-than-expected fiscal Q1 earnings report and restructuring announcement, falling Treasury yields, and another weekly initial jobless claims report that was supportive of the soft landing scenario provided the fuel for the opening bid.
Thursday’s open continued ideas of potential overvaluation. Treasury yields then started to move up and the market slipped consistently on the fostered selling.
Friday ended the week on a stable note ahead of key data releases next week, including the Consumer Price Index, Retail Sales, Industrial Production, Housing Starts, and Producer Price Index reports all from January.
There was not much conviction from buyers or sellers, which left the S&P 500 and Dow with small gains while the Nasdaq logged a modest loss. Mega cap stocks seemed to lag, keeping pressure on index level performance. Tesla ($TSLA) was a losing standout among the mega cap stocks amid investors’ concerns that a potential Department of Transportation order could force Tesla to make its charging stations available to other electric vehicles.
Oil prices climbed up some lost ground on Friday, which also pressured the equity market, in response to Russia saying it is going to cut production by 500,000 barrels per day in March in response to international sanctions.
The key takeaway from the report is the understanding that the year-ahead inflation expectation increased from January, raising concerns about consumers’ future discretionary spending capacity.
Only 1 of the 11 S&P 500 sectors made gains this week – energy (+4.9%) — while the communication services sector (-5.6%) registered the largest decline by a wide margin.
The 2-yr Treasury note yield rose 22 basis points this week to 4.51% and the 10-yr note yield rose 21 basis points to 3.74%.
Those moves in the Treasury market reflect concerns that the recent strength in employment reports will give the Fed more room to raise rates and to keep rates higher for longer. This sentiment was also evident in the fed funds futures market, which is now pricing in a 74% probability of a third, 25-basis point rate increase at the May FOMC meeting, according to the CME FedWatch Tool, versus only a 30% probability last Thursday (i.e., the day before the employment report).
Dividend Dollars’ Outlook & Opinion
That’s it for the recap. Now for my opinion!
This week was a consolidation week, with the main indices recording only modest losses week over week. As we mentioned last week, the market got a bit too extended a little too fast, so we anticipated a consolidating week or minor moves. That is exactly what we got!
Earnings continued this week and results continue to follow the “better than feared” theme. We are about 2/3 of the way through earnings season after this week. Earnings beats stayed the same this week at 70% and revenue beats moved up to 55% from 52%. Earnings results still don’t appear to be overly bullish, and with near-term negative growth expectations it is hard to justify the level that the S&P 500 is trading at. These figures are tracked using MarketBeat.
In recent weeks, we broke above the long term resistance (red shaded channel) and also the next level of resistance at the 4,100 level (top green line). As we called out last week, that 4,100 level did turn into support on Monday and Wednesday, but was shortly broken thereafter.
With the S&P now back under the 4,100 level (an area that was resistance back in September and December) and with earnings season closer to ending, it is hard for me to think of a reason for S&P to go higher. This is especially true if we consider the S&P’s forward P/E paired with the fact that the “E” side of things doesn’t look to be growing in the near term.
Because of this, I wouldn’t be surprised if we see some range movement between the 4,100 level and the 3,800 level (bottom green line) that created a nice base from mid-December to early January. The next FOMC meeting and coming inflationary data are the only items I can foresee being important enough to move the market out of that range, up or down.
VIX saw small gains this week and appears to be in tighter range so far this year compared to last year. The VIX structure has significantly flattened over the past few months. This could be related to a relatively more comfortable outlook regarding where the Fed stands on inflation. Other than this observation in VIX, the other items I write about sometimes (such as OI change and put to call ratios among VIX and the ETFs) did not grab my attention much. Some are leaning more bearish than last week, but not significantly so.
Overall, 2023 kicked off with a bang for bulls, however it appears that traders need a break. Macro items need some tie to play out. I anticipate more consolidations in the near term.
Fed speak this week felt moderately hawkish and bond yields are rising, giving investors lots to chew over. Next week, volatility could be present with the CPI reading on Tuesday. If it comes in significantly lower than the consensus, bulls could be off to the races again, otherwise the technical suggest flat or slightly bearish week ahead.
That’s it for my recap! If you would like to see how I am building my dividend portfolio using my predictions/strategy written here, you can read about my buys in my weekly portfolio update on this link.
And if you like updates like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week.
Welcome back to the weekly Dividend Dollars portfolio review! This portfolio update is brought to you by Sharesight, a portfolio tracking tool that I am happy to partner with. Their platform makes tracking trading and dividend history, understanding your performance, and saving time a breeze. I wrote a review of the product that you can read here if you’re interested in learning more! Click the link above or the picture below to get a special offer only for Dividend Dollar readers!
Here at Dividend Dollars, our investing approach is a dividend growth strategy with aspects of value investing and fundamental analysis. I am a young investor in my 20’s and by sticking to this strategy over the long term, the magical powers of compounding are on my side. This allows me to more easily build substantial positions in dividend paying stocks over time, which will one day help me reach the ultimate goal of being financially free through the sources of passive income they provide. You can read more about the strategy here. Let’s dive into the portfolio review!
Portfolio Value
To date, I have invested $13,490 into the account the total value of all positions plus any cash on hand is $13,852.71. That’s a total gain of 2.74%. The account is down $230.10 for the week which is a 1.63% loss.
We started building this portfolio on 9/24/2021 and when compared to the S&P 500 we are outperforming the market so far! Within that same timeframe, the S&P 500 is down -8.19% which puts us 10.93% higher than the market! I love tracking my portfolio against a benchmark like the S&P. The above chart comes from Sharesight which makes portfolio and dividend management a breeze!
We added $120 in cash to the account this week, trades made will be broken out below.
Portfolio
Above is a dashboard of the portfolio that tracks annual dividend income, yield, beta, dividend growth, and more.
Below is a table of everything we are invested in so far. There you can see my number of shares, shares bought through dividend reinvestments, average cost, gains, and more. The tickers in green are positions that I bought shares in this week, the blue ones are positions that I reinvested dividends into, the yellow ones are positions that announced a dividend increase this week, and the red are positions that I trimmed. Our PADI this week decreased from $518 to $525.
Dividends
This week I received no dividends, how sad!
In my portfolio, all positions have dividend reinvestment enabled. I don’t hold onto the dividend, I don’t try to time the reinvestment, I just let my broker do it automatically.
Dividends received for 2023: $55.72
Portfolio’s Lifetime Dividends: $466.12
Trades
This week was a week of buying down into some DCA worthy positions leading into coming ex-dividend dates. We added to $AY, $MMM, and $SHOO. $AY’s next dividend hasn’t been declared yet, but I am expecting it to hit in mid-March.
The $MMM add was in anticipation of the dividend hike that was expected to be announced that day. The hike was another token small hike in order to keep their streak alive, which was to be expected given the situation with their litigations. I’ll continue to add slowly to this one, the litigations will not put $MMM out of business by any means but is a significant headwind for them in coming years. Long-term, these litigations provide a great value opportunity to buy into a powerhouse of a company.
Then both $SHOO and $ATVI were DCA’s. $ATVI was down on regulatory news, but that does not change my thesis on the merger arbitrage play with expected completion in June. At almost 4% of my portfolio, this position probably won’t get much bigger than here.
We also completed our regular ETF buys on Wednesday.
Below is a breakdown of the trades I made this week:
February 6th, 2023
Activision Blizzard ($ATVI) – added 1 share at $71.42
February 7th, 2023
3M ($MMM) – added 0.25 shares at $115.28
February 8th, 2023
SPDR S&P 500 ETF ($SPY) – added $10 at $413.62 per share (weekly buy)
Global X S&P 500 Covered Call & Growth ETF ($XYLG) – added $10 at $26.73 per share (weekly buy)
Schwab US Dividend Equity ETF ($SCHD) – added $10 at $77.11 per share (weekly buy)
Steven Madden ($SHOO) – added 1 share at $34.19
February 9th, 2023
Steven Madden ($SHOO) – added 1 share at $33.91
Atlantica Sustainable Infrastructures ($AY) – added 1 share at $26.45
February 10th, 2023
AT&T ($T) – Covered call expired worthless, 100% gain on the premium
Next week I will continue to add $10 into each ETF ($SPY, $XYLG, and $SCHD) and will continue to hold onto some cash if the market gets lower. I have started to slowly deploy that cash in case a bottom has already been hit, but only time will tell. I really want to deploy this cash position into $CMCSA, and $INTC to build 100 share positions in them for covered call activities. I will also be watching $T for opportunities to sell covered calls.
Summary
That is it for the update this week. The market recap and outlook for this wild week will be posted soon, so make sure to have the site bookmarked or subscribe via email on the homepage!
Let me know what you think of the progress so far, share with me your progress and questions, interact with me on Twitter and CommonStock and other socials using the links below!
Thank you for reading! See you next week and stay safe!
This weekly market recap is brought to you by Koyfin, a powerful analytical tool that I am proud to partner with. Their platform is entirely customizable for whatever data you want to look at including stocks, ETFs, mutual funds, currencies, economic data releases (one of my personal favorites used often for these posts), crypto, and even transcripts of company events! Click the link above to get a special offer only for Dividend Dollar readers or go give my product review a read if you’re interested!
Weekly Market Review
This week started slowly as the market looked to take some money off the table following a strong January and waiting for the FOMC meeting. On Monday, the Nasdaq and S&P 500 were up 11% and 6% for January.
The slow Monday was kicked off by an article in WSJ by Nick Timiraos (chief economics correspondent for WSJ and Fed’s assumed preferred source for divulging information to) indicating that Fed officials were concerned that inflation could return to higher levels due to tight labor markets. He added that the Fed’s interest rate strategy could depend on how much members believe the economy will slow.
Anticipation of the Q4 Employment Cost Index, the January ISM releases, and the January Employment Situation Report and over 100 S&P 500 companies reporting earnings this week also added to the slow start.
The momentum changed on Tuesday as the market looked to end January with some gumption. A well-received Q4 Employment Cost Index and weaker-than-expected January Chicago PMI and Consumer Confidence data also may have led to the idea that the Fed may look to pause rate hikes.
The latter point was corroborated by another Nick Timiraos article that suggested the Employment Cost Index report could increase the possibility of Fed officials agreeing to pause the rate hikes sooner rather than later.
Wednesday came in strong to kick off the month of February . This followed the FOMC’s unanimous decision to raise the target range for the fed funds rate by 25 basis points to 4.50-4.75%, as expected. In the press conference afterwards, Powell did not go out of his way to rein in the market’s enthusiasm.
Mr. Powell acknowledged that the “Full effects of rapid tightening so far have yet to be felt and we have more work to do.” Core services inflation is still running too high, which creates a basis for ongoing rate hikes. Overall, though, Mr. Powell was generally encouraging about the signs of disinflation.
Also, he did not strictly express disagreement with loosening financial conditions and maintained that he thinks there is a path to getting inflation back down to 2% without a significant economic decline or increase in unemployment.
A huge earnings-driven gain in Meta Platforms ($META) kept rally effort strong at the start of Thursday’s session. The earnings results and reception of the FOMC materials encouraged a sense that earnings growth and monetary policy may be better than feared this year.
Some data releases on Thursday also helped with the market’s move higher. The Q4 Productivity report showed a drop in unit labor costs, an affirmation of falling inflation costs. Separately, weekly initial jobless claims hit their lowest level (183,000) since April 2022, providing additional confirmation of a strong labor market that could absorb the impact of a soft landing.
The rally did hit a speed bump at the 4,200 level for the S&P 500. The market may have reached an overextended area, though it did not last long as the main indices were able to climb back towards session highs ahead of Thursday’s close.
However, Thursday wasn’t all sunshine and rainbows as a sizable loss in Merck ($MRK) after its quarterly results kept the price-weighted Dow Jones Industrial Average in negative territory for most of Thursday.
Friday turned out to be a losing session with disappointing earnings and/or guidance from Alphabet ($GOOG), Amazon.com ($AMZN), Starbucks ($SBUX), and Ford ($F) despite a strong gain in January nonfarm payrolls (+517,000) and a stronger than expected January ISM Services PMI (55.2%) that returns the index to growth levels.
The strong data created some doubts as to whether the Fed will pause its rate hikes soon and cut rates at all before the end of the year, contrary to the case for rates in the early weekdays.
The fed funds futures market is now accounting for the prospect of a third 25 basis point rate hike in May. According to the CME FedWatch Tool, the probability of a rate hike in May, in addition to the one that is fully priced in for March, increased to 48% from 33% last week.
Many stocks pulled back on profit-taking efforts following the earnings and economic news. Apple ($AAPL), was the exception. Apple declined 2% off the open but quickly bounced and finished the day up 2.4%.
Only three S&P 500 sectors registered losses this week — energy (-5.8%), health care (-0.13%), and utilities (-1.42%) — while the communication services (+5.26%), information technology (+3.71%), and consumer discretionary (+2.34%) sectors logged the biggest gains.
Dividend Dollars’ Outlook & Opinion
That’s it for the recap. Now for my opinion!
This week crushed my moderately bullish outlook from the prior week. The market is at nearly a 9% in a little more than a month and have given back very little, even with earnings season being a bit mixed!
Q4 earnings season has reached the halfway point so far. 103 S&P 500 companies reported earnings and 74 of them beat consensus expectations this week. That puts us exactly at 250 of the 500 reporting results. The average EPS and Rev beats both increased this week, to 70% and 52% respectively. From a growth standpoint, these results are still lower compared to YoY results from last Q4. This information is tracked using MarketBeat.
Since the market broke out of the long term resistance, it has been off to the races. As we mentioned last week, the next point of resistance was around the 4,100 area that had rejected three times prior. The market broke through that level on Wednesday with strength. Then, on Thursday, we got a golden cross when the 50-day SMA moved above the 200-day SMA (yellow circle) which is a bullish technical indication.
Now that the market is above the 4,100 area, that resistance has turned into support and will be an area we want to watch if we see a small retracement in the coming days.
Overall, after a tough 2022 with lots a tax-loss harvesting ending the year, traders’ cash piles appear to be getting put to work. Communication, Consumer Discretionary, and Tech sectors priced significantly lower than where they were a year look like the areas that the cash is getting sent to. However, with a gain of almost 9% YTD, almost 3% of that coming from this week, it’s been a little too much too fast.
Vix OI change this week looks to be moderately bearish, SPX OI change is moderately bullish, ETF (SPY, QQQ, DIA, and other key ETFs) OI change is moderately bearish. The OI put call ratios for those items are neutral, moderately bearish, and moderately bearish respectively.
Vix levels in general are in the normal zone as of Friday’s close, with futures trading just slightly higher. Both are neutral indicators.
Economic data for next week is sparse, with the main items being jobless claims and consumer sentiment reports. I’ll be curious to read the wholesale inventories report and the consumer credit report, though these rarely have effects on the market.
With earnings season now past the halfway point, the next fed meeting 6 weeks away, and a number of mixed Vix and option indicators, I wouldn’t be surprised to see a bit of consolidation or small moves for the next few weeks.
That’s it for my recap! If you would like to see how I am building my dividend portfolio using my predictions/strategy written here, you can read about my buys in my weekly portfolio update on this link.
And if you like updates like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week.
It came to my attention that I missed alerting some moves in this portfolio update! I apologize about that. This post is mostly a repost, but it does contain edits to include items that I missed. You can find these in the bolded and italicized font.
Welcome back to the weekly Dividend Dollars portfolio review! This portfolio update is brought to you by Sharesight, a portfolio tracking tool that I am happy to partner with. Their platform makes tracking trading and dividend history, understanding your performance, and saving time a breeze. I wrote a review of the product that you can read here if you’re interested in learning more! Click the link above or the picture below to get a special offer only for Dividend Dollar readers!
Here at Dividend Dollars, our investing approach is a dividend growth strategy with aspects of value investing and fundamental analysis. I am a young investor in my 20’s and by sticking to this strategy over the long term, the magical powers of compounding are on my side. This allows me to more easily build substantial positions in dividend paying stocks over time, which will one day help me reach the ultimate goal of being financially free through the sources of passive income they provide. You can read more about the strategy here. Let’s dive into the portfolio review!
Portfolio Value
To date, I have invested $13,130 into the account the total value of all positions plus any cash on hand is $13,332.90. That’s a total gain of 1.55%. The account is down $233.43 for the week which is a 1.72% loss.
We started building this portfolio on 9/24/2021 and when compared to the S&P 500 we are outperforming the market so far! Within that same timeframe, the S&P 500 is down -10.84% which puts us 12.39% higher than the market! I love tracking my portfolio against a benchmark like the S&P. The above chart comes from Sharesight which makes portfolio and dividend management a breeze!
We added $120 in cash to the account this week, trades made will be broken out below.
Portfolio
Above is a dashboard of the portfolio that tracks annual dividend income, yield, beta, dividend growth, and more.
Below is a table of everything we are invested in so far. There you can see my number of shares, shares bought through dividend reinvestments, average cost, gains, and more. The tickers in green are positions that I bought shares in this week, the blue ones are positions that I reinvested dividends into, the yellow ones are positions that announced a dividend increase this week, and the red are positions that I trimmed. Our PADI this week decreased from $500 to $505. This is mainly because of a drop in the yearly payout from $XYLG following their most recent dividend declaration.
Dividends
This week I received no dividend, bummer!
In my portfolio, all positions have dividend reinvestment enabled. I don’t hold onto the dividend, I don’t try to time the reinvestment, I just let my broker do it automatically.
Dividends received for 2023: $14.88
Portfolio’s Lifetime Dividends: $425.28
Trades
This was quite a busy week with a large mid-week dip that I took advantage of followed by a sweet two-day rally to leave the market and my portfolio significantly higher.
I made lots of buys in the portfolio on the down-day Wednesday and then a little more on Thursday.Firstly, we initiated a new position in Orsted (which I wrote a brief article on how they are poised to be a huge renewable power player in the North Sea, you can read that here), added to my favorite DCA’s of ALLY, INTC, and BAC, and also executed our weekly $10 adds in SPY, XYLG, & SCHD.
The buys on Wednesday were partially funded by sales in $JNJ and $MDT. Those positions were my only healthcare positions at the time. Though many would argue that both are strong companies and great holds,I personally don’t feel too confident in my knowledge of the sector.
I could go on and on listing the items I am not well-read on, but the main ones are: there are lots of moving parts with regulators, R&D into new drugs and technologies can be risky, patents and their expirations create frequently shifting product portfolios that need to be monitored, and increased political focus on cheaper healthcare. All of these things put the sector above my head. Now this isn’t to say that I won’t ever invest in the sector, I just simply to need to do a bit of research and familiarizing myself before committing to it.
Always invest in what your comfortable with. Take $INTC or $T for example. I’ve been following their business plans for quite some time. I am very familiar with where they’re at and where they’re going as companies. This familiarity gives me conviction and comfort. Because healthcare is pretty foreign to me, I don’t have that and am stepping back from it with these sales.
Lastly, my first covered call on AT&T expired worthless this week giving me a 100% gain on that premium. I will be watching their earnings call next week and will be looking for a spot to write another.
Below is a breakdown of the trades I made this week:
January 17th, 2023
Orsted ($DNNGY) – added 3 shares at $34.17
January 18th, 2023
Microsoft ($MSFT) – added 0.14 shares at $240.79
Ally Financial ($ALLY) – added 3 shares at 26.84
Johnson & Johnson ($JNJ) – sold position of 1 share at $170.63. Loss of $7.85.
Medtronic ($MDT) – sold position of 2.016938 shares at $78.87. Gain of $4.26.
Bank of America ($BAC) – added 2 shares at $33.72
Intel ($INTC) – added 2 shares at $28.77
SPDR S&P 500 ETF ($SPY) – added $10 at $394.45 per share (weekly buy)
Global X S&P 500 Covered Call & Growth ETF ($XYLG) – added $10 at $25.88 per share (weekly buy)
Schwab US Dividend Equity ETF ($SCHD) – added $10 at $76.39 per share (weekly buy)
Next week I will continue to add $10 into each ETF ($SPY, $XYLG, and $SCHD) and will continue to hold onto the rest of my cash if the market gets lower. I have started to slowly deploy that cash in case a bottom has already been hit, but only time will tell. I really want to deploy this cash position into $CMCSA, and $INTC to build 100 share positions in them for covered call activities.
Summary
That is it for the update this week. The market recap and outlook for this wild week will be posted on Saturday, so make sure to have the site bookmarked or subscribe via email on the homepage!
Let me know what you think of the progress so far, share with me your progress and questions, interact with me on twitter and Instagram using the links below!
Thank you for reading! See you next week and stay safe!
This weekly market recap is brought to you by Koyfin, a powerful analytical tool that I am proud to partner with. Their platform is entirely customizable for whatever data you want to look at including stocks, ETFs, mutual funds, currencies, economic data releases (one of my personal favorites used often for these posts), crypto, and even transcripts of company events! Click the link above to get a special offer only for Dividend Dollar readers or go give my product review a read if you’re interested!
Weekly Market Review
The January rally carried on as investors received more market-moving earnings results and data releases this week. The positive bias had the S&P 500 get back above its 200-day moving average and stay there all week.
Things got started on an upbeat note on Monday after an article by Nick Timiraos (chief economics correspondent for WSJ and Fed’s assumed preferred source for divulging information to) highlighted the possibility of the Fed pausing its rate hikes this spring.
Monday also brought us a survey of businesses by the NABE that conveyed a lower possibility (56% vs nearly two-thirds before) of the U.S. being in a recession or entering one.
The market hit a speed bump on Tuesday with a lot of divergent stock prices for a number of NYSE-listed stocks including Morgan Stanley ($MS), AT&T ($T), Verizon ($VZ), Nike ($NKE) and more. The abnormality quickly led to volatility halts brining many of us to wonder what was going on. The official explanation turned out to be an “exchange-related issue.” The issue seemed to be resolved quickly with announcements of some trades will be declared null.
Market strength was offset by some disappointing earnings/guidance from the likes of Verizon ($VZ), 3M ($MMM), Union Pacific ($UNP), and General Electric ($GE), along with the news that the U.S. filed an antitrust lawsuit against Google over alleged dominance in digital advertising.
Price action on Wednesday was integral to keeping the rally alive this week. Valuation concerns from Microsoft’s ($MSFT) disappointing fiscal Q3 outlook and expected growth deceleration for its Azure business fueled a broad retreat to kick off the session.
Buyers showed up quickly after the S&P 500 dipped below its 200-day moving average to push the market higher. Most stocks either narrowed their losses or completely recovered and closed the session with a gain.
After the strong reversal on Wednesday, Tesla ($TSLA) reported strong quarterly results and outlook, which helped the rebound in the mega cap space, and Chevron ($CVX) announced a massive $75 billion stock repurchase program announcement.
There was also a number of positive data releases Thursday that helped support a positive bias. The Advance Q4 GDP Report increased at an annual rate of 2.9% in the fourth quarter of 2022. The second estimate will be released towards the end of February.
Weekly initial jobless claims unexpectedly decreased by 6,000 compared to the previous week. The current level of 186,000 is well below the 4-week moving average of 197,500.
December durable goods orders came in better than expected, as well. Orders increased 5.6% month over month to $286.9B versus an estimated 2.5%. This is especially a good reading compared to a -1.7% decrease from revised numbers last month. Excluding defense, the durable goods orders were up 6.3% for the month. Inventories, up for 23 consecutive months at this point, increase again by 0.7%.
The rally effort continued on Friday despite Intel ($INTC) reporting ugly results and guidance, KLA Corp. ($KLAC) issuing below-consensus guidance, Chevron ($CVX) missing on earnings estimates, and Hasbro ($HAS) issuing a Q4 profit warning.
On Friday, the PCE Price Index was released. Results were up 0.1% month-over-month while the core-PCE Price Index, which excludes food and energy, was up 0.3%, as expected. That left the year-over-year changes at 5.0% and 4.4%, respectively, versus 5.5% and 4.7% in November.
There was a sharp pullback before Friday’s close, as people took money off of the table heading into a big week of earnings next week from Alphabet ($GOOG), Apple ($AAPL), Amazon ($AMZN), and Meta. Other catalysts include the FOMC decision and the January Employment Report.
Only two S&P 500 sectors registered losses this week — utilities (-0.5%) and health care (-0.9%) — while the consumer discretionary (+6.4%), information technology (+4.1%), and communication services (+3.3%) sectors led the outperformers.
Dividend Dollars’ Outlook & Opinion
That’s it for the recap. Now for my opinion!
As mentioned in the last market update, I was expecting a red week this week and people took money off the table leading into an earnings heavy week. My other, less anticipated call, was that stocks could break above the downtrend line. This was the outcome to took precedent.
Stocks looked to trend higher this week and was supported by better than feared (notice the “better than feared” vs “better than expected” clarification was intentional) earnings reports and economic data! No data report this week was too good or too bad, and more items like this support the chance of an actual soft landing for the economy. We will have a better feeling for this next week after the FOMC meeting, but in the meantime bias is positive.
147 of the S&P 500 companies have released earnings so far. 50% have beat on top line expectations and 69% have beat on bottom line. The 50% beat rate, should it hold, would be the lowest top line rate since before the pandemic. Next week is a big earnings week and will give us more information on potential earnings recession. This information is tracked using MarketBeat.
The S&P chart has turned bullish as the market pushed above the downtrend and put some space between price and the SMA 200. We have had the highest number of daily closes above the 200 day SMA in 2023 so far since last spring. The next level I see is around 4,080 that has rejected three times.
Similarly, the Nasdaq Composite index has a level a 11,617 to get over. It is also approaching the change to break above the 200 day SMA for the first time in a year. Additionally, the index is above is 11,500 resistance level. It looks bullish but the coming earnings from mega-cap tech names have the potential to move it.
Overall, stocks are riding recent bullish momentum and are being supported by technical developments. The market appears to be hopeful that the Fed will show a less aggressive stance on rates. We have seen this optimism in the past before, but we haven’t seen the Fed move into a stock friendly stance. Maybe that happens at the next meeting, maybe we get more information on potential rate hike path.
We will see what happens with the Fed next week and will have a better feel of what’s going on in tech. With VIX as low as it is, a slurry of stocks reaching 52 week highs, decent earnings and data, the bulls appear to be in control for the near term. Potential for volatility next week is high. I think the market is moderately bullish in the first of the week then could be volatile in either direction depending on those factors.
That’s it for my recap! If you would like to see how I am building my dividend portfolio using my predictions/strategy written here, you can read about my buys in my weekly portfolio update on this link.
And if you like updates like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week.
Welcome back to the weekly Dividend Dollars portfolio review! This portfolio update is brought to you by Sharesight, a portfolio tracking tool that I am happy to partner with. Their platform makes tracking trading and dividend history, understanding your performance, and saving time a breeze. I wrote a review of the product that you can read here if you’re interested in learning more! Click the link above or the picture below to get a special offer only for Dividend Dollar readers!
Here at Dividend Dollars, our investing approach is a dividend growth strategy with aspects of value investing and fundamental analysis. I am a young investor in my 20’s and by sticking to this strategy over the long term, the magical powers of compounding are on my side. This allows me to more easily build substantial positions in dividend paying stocks over time, which will one day help me reach the ultimate goal of being financially free through the sources of passive income they provide. You can read more about the strategy here. Let’s dive into the portfolio review!
Portfolio Value
To date, I have invested $13,250 into the account the total value of all positions plus any cash on hand is $13,694.30. That’s a total gain of 3.35%. The account is up $228.72 for the week which is a 1.70% gain.
We started building this portfolio on 9/24/2021 and when compared to the S&P 500 we are outperforming the market so far! Within that same timeframe, the S&P 500 is down -8.64% which puts us 11.99% higher than the market! I love tracking my portfolio against a benchmark like the S&P. The above chart comes from Sharesight which makes portfolio and dividend management a breeze!
We added $120 in cash to the account this week, trades made will be broken out below.
Portfolio
Above is a dashboard of the portfolio that tracks annual dividend income, yield, beta, dividend growth, and more.
Below is a table of everything we are invested in so far. There you can see my number of shares, shares bought through dividend reinvestments, average cost, gains, and more. The tickers in green are positions that I bought shares in this week, the blue ones are positions that I reinvested dividends into, the yellow ones are positions that announced a dividend increase this week, and the red are positions that I trimmed. Our PADI this week decreased from $505 to $509. This is mainly because of a drop in the yearly payout from $XYLG following their most recent dividend declaration.
Dividends
This week I received two dividends. $4.06 from ETRACS 2x Monthly Levered ETN and $4.10 from Comcast.
In my portfolio, all positions have dividend reinvestment enabled. I don’t hold onto the dividend, I don’t try to time the reinvestment, I just let my broker do it automatically.
Dividends received for 2023: $23.04
Portfolio’s Lifetime Dividends: $433.44
Trades
This was a quite slow week for my portfolio. Except for the dip on Tuesday, the market rallied higher for most of the week. I’d much rather buy in more red weeks, so I did not spend too much time making buys. I executed our weekly ETF buys, reinvested all dividends, and did one opportunistic buy into $MSFT after their earnings.
Additionally, I sold a $T covered call going into the earnings, but second guessed it and closed it before the report. Boy am I glad I did! $T had a great earnings report and ran high enough to bring my position in the green for the first time since I began buying!
Below is a breakdown of the trades I made this week:
January 23rd, 2023
AT&T ($T) – sold $20.5 covered call 1/27 for $7 premium
January 24th, 2023
AT&T ($T) – bought to close $20.5 covered call at $8
SPDR S&P 500 ETF ($SPY) – added $10 at $406.47 per share (weekly buy)
Global X S&P 500 Covered Call & Growth ETF ($XYLG) – added $10 at $26.42 per share (weekly buy)
Schwab US Dividend Equity ETF ($SCHD) – added $10 at $76.38 per share (weekly buy)
Next week I will continue to add $10 into each ETF ($SPY, $XYLG, and $SCHD) and will continue to hold onto some cash if the market gets lower. I have started to slowly deploy that cash in case a bottom has already been hit, but only time will tell. I really want to deploy this cash position into $CMCSA, and $INTC to build 100 share positions in them for covered call activities. I will also be watching $T for opportunities to sell covered calls.
Summary
That is it for the update this week. The market recap and outlook for this wild week will be posted on Saturday, so make sure to have the site bookmarked or subscribe via email on the homepage!
Let me know what you think of the progress so far, share with me your progress and questions, interact with me on twitter and Instagram using the links below!
Thank you for reading! See you next week and stay safe!
